Retirees Pension Plan
Annual Report to Membership
September, 2011
The primary purpose of this report is:
∗ to review the actuarial valuation information and special payment requirements of the
Retirees Pension Plan as at December 31, 2010
∗ to review investments and investment performance of the Plan in 2010
∗ to report on the activities of the Retirees Pension Committee
ACTUARIAL VALUATION at December 31, 2010
Membership Data
Age of Pensioners & Beneficiaries
65 - 70
71 -75
76 - 80
81 - 85
86 - 90
91+
Total
2010
0
23
51
66
71
30
241
2009
3
29
57
82
57
22
250
Going-Concern Financial Position of the Plan
The financial position of the Plan on a going-concern basis is measured by comparing the
market value of assets to the actuarial liabilities assuming the Plan is continuing for the
long-term. The actuarial valuation performed as at December 31, 2010 shows that the
Plan, on a going-concern basis, is in a deficit position of $5.44 million as per the summary
table below. Comparative numbers as at December 31, 2009 are also provided.
Going-Concern Financial Position
Actuarial value of assets
Actuarial liability
Surplus (Deficit)
2010
$45,284,000
50,723,000
$ (5,439,000)
2009
$49,097,000
52,559,000
$(3,462,000)
Solvency Position of the Plan (Hypothetical Wind-Up)
The Pension Benefits Act (Saskatchewan) requires the University to review whether the
assets of the Plan would be sufficient to cover the liabilities of the Plan in the event of a
plan wind-up. The actuarial valuation performed as at December 31, 2010 shows that the
Plan, on a hypothetical wind-up basis, is in a deficit position of $11.29 million, compared to
$8.59 million at December 31, 2009.
This communication, future communications and other pension plan information are available online at:
www.usask.ca/fsd/faculty_staff/pension_plans
Solvency Financial Position
Solvency assets
Solvency liabilities
Surplus (Deficit)
2010
$45,184,000
56,476,000
$ (11,292,000)
2009
$50,628,000
$59,221,000
$(8,593,000)
Temporary Solvency Deficiency Payment Relief
As indicated in previous newsletters, The Pension Benefits Regulations, 1993 was amended
to provide temporary relief from solvency deficiency funding for sponsors of defined
benefit plans. The university undertook to elect for temporary solvency relief in
compliance with regulations for the valuation report filed at December 31, 2009. This
relief provides for a three year moratorium from funding a solvency deficiency and is in
effect until December 31, 2012 when an actuarial valuation must be filed with the
regulators.
This relief does not apply to valuations filed previous to December 31, 2008. The current
payment schedule, with respect to the solvency deficiency established at December 31,
2006 remains unchanged.
Funding Requirements
The University was required to file a valuation with regulatory authorities as at December
31, 2006, revealing a solvency deficiency of $1,323,000. This deficiency is being amortized
over a period of five years, with monthly payments of $24,380 being paid by the University
at the end of each month from January 1, 2007 to December 31, 2011.
The University was also required to file a valuation at December 31, 2009. The goingconcern deficiency (unfunded liability) of $3,462,000 established at this date is being
amortized over a period of fifteen years, or until the next funding valuation is certified, with
monthly payments of $29,800 being paid by the University.
Total payments to the plan in 2010 for the deficiencies above amounted to $650,160.
Required Monthly Special Payments (With Solvency Relief)
Monthly deficit required contributions
Going-concern deficit (unfunded liability)
2006 Solvency Deficiency
2009 Solvency Deficiency
Total Monthly Payments
January , 2011 to
December 31, 2011
$29,800
24,380
--$54,180
January 1, 2012 to
December 31, 2024
$29,800
----$29,800
.
This communication, future communications and other pension plan information are available online at:
www.usask.ca/fsd/faculty_staff/pension_plans
Please Note: As these ongoing required payments are being made by the
University, there will be no decrease in current monthly pension payments
received by pensioners. Due to the current financial position of the Plan, there
will be no ad-hoc increases to current pensions.
INVESTMENTS of the PENSION PLAN at December 31, 2010
Market Value of Pension Plan Assets
By Asset Classes
Canadian Equities
Non-Canadian Equities
Total Equities
2010
($000)
$6,188
11,208
$ 17,396
% of Market
Value
13.7
24.8
38.5
Bonds
Short term investments
Total Fixed Income
$26,886
931
$27,817
59.5
2.0
61.5
Total Market Value
$45,213
100.0
By Investment Manager
BlackRock Asset Management (formerly Barclays Global)
Jarislowsky Fraser Limited
$26,886
18,327
59.5
40.5
Investment Performance
The long-term investment goal of the Plan is to achieve an annualized total rate of return of
a least 5.9% as of the December 31, 2010 actuarial valuation. To achieve this goal, the Plan
has adopted an asset mix that has a bias in favour of fixed income investments.
The responsibility for investing the assets of the Plan has been delegated to two
professional investment fund managers with different mandates to ensure adequate
investment diversification.
The Plan’s Return Benchmark is a performance standard developed by the Investment
Consultants, Aon Hewitt. The Retirees Pension Committee and the Board of Governors have
approved the benchmark. The investment fund managers of the Plan are expected to meet
or surpass the benchmark.
This communication, future communications and other pension plan information are available online at:
www.usask.ca/fsd/faculty_staff/pension_plans
Investment Performance
Plan return (gross)
Plan return benchmark (gross)
Consumer Price Index
2010
6.7%
8.1%
Last 4 years
2.3%
2.3%
Last 10 years
4.2%
4.0%
2.4%
1.8%
2.0%
2011 Investment Update
In the newsletter of October 2010, the Committee informed Plan members that it was
undertaking a comprehensive review of the Plan’s investment policy.
With the assistance of the Plan’s Investment Consultant, Aon Hewitt, the Committee
conducted an extensive review of the investment policy of the Plan. The purpose of the
review was to address the Plan’s objectives of improved liquidity, increased cash flows,
reduced risk, and stability of investment returns as identified by the Committee and
incorporated in the Funding Policy.
Upon conclusion of its review, the Committee recommended a policy change, moving the
current asset mix to a 70% custom bond, 30% equity portfolio. This led to a change in the
management structure of the Plan, consisting of an active equity manager and a new
custom bond manager (liability matching bond manager). The Committee interviewed
three custom bond managers and recommended to the Board of Governors that Greystone
Managed Investments be appointed as the new investment manager. The transition is
scheduled to proceed over two years.
RETIREES PENSION COMMITTEE
Committee Members:
Bruce Schnell
schnellbj@sasktel.net
Dennis Dibski
djdibski@shaw.ca
Patricia Lawson
plawson@sasktel.net
Terry Summers, Financial Services terry.summers@usask.ca
Laura Kennedy, Financial Services laura.kennedy@usask.ca
Heather Fortosky, Pensions Office heather.fortosky@usask.ca
Meetings of the Committee
The Retirees Pension Committee met 8 times during the year. Acting in its capacity as
managing fiduciary; the Committee is responsible for the oversight of the Pension Plan
operations, including funding, investment, and administration of the Plan. The Committee
activities over the past year in fulfilling these responsibilities are outlined as follows:
This communication, future communications and other pension plan information are available online at:
www.usask.ca/fsd/faculty_staff/pension_plans
Meeting Date
Time
allocated
Purpose
August 30, 2010
3.0 hours
September 30, 2010
2.5 hours
October 25, 2010
2.5 hours
April 18, 2011
2.0 hours
April 25, 2011
1.5 hours
May 25, 2011
1.5 hours
May 27, 2011
5.5 hours
June 7, 2011
1.0 hours
▪2009 Actuarial Valuation Review
▪Investment Policy Review (Phase 1)
▪Quarterly Investment Performance Review to June 30th
▪ Investment Manager presentation: Jarislowsky Fraser
▪Investment Policy Review (Phase 2)
▪Custom Bond Manager Search Assessment
▪Quarterly Investment Performance Review to Dec 31st
▪2010 Actuarial Valuation Review
▪Quarterly Investment Performance Review to Mar 31st
▪Investment Manager presentation: BlackRock
▪Custom Bond Manager Search:
▪Investment Manager Interviews and evaluations
▪Financial Statements at December 31, 2010 Review
RETIREES PENSION PLAN INFORMATION
Plan Documents:
Copies of the following documents are on file in the office of the Director of Pensions
(Financial Services). They are available for inspection by any member of the Plan during
regular working hours by prior arrangements.
∗ Plan Text
∗ Financial Statements
∗ Actuarial Reports
∗ Auditor’s Report
∗ Committee meeting agendas and minutes
Other Agents of the Plan:
Actuary:
Aon Hewitt, Saskatoon
Investment Consultant:
Aon Hewitt, Regina
Custodian:
CIBC Mellon Global Securities
Pension Administration & Support:
Pensions Office, Financial Services
Room 220, Research Annex, 105 Maintenance Road
966-6633
Please contact the Pensions Office at 966-6633 or any member of the Retirees Pension
Committee if you have any questions about the items covered in this newsletter.
This communication, future communications and other pension plan information are available online at:
www.usask.ca/fsd/faculty_staff/pension_plans